Personal finance: how a freelance writer manages money

Everyone has a unique approach to personal finance with different goals, lifestyles, and incomes. NerdWallet asks everyday people how they handle personal finance, and speak with a 25-year-old freelance writer in this installment of 'How Do You Do Money?'

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A person types on a computer. Freelance writer Spenser Davis says financial organization helps him and his family pay off student loans.

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NerdWallet’s How Do You Do Money? series asks people from various walks of life to share their attitudes and approach to personal finance, with the goal of bringing transparency to discussions surrounding money. In this installment, we talk with Spenser Davis, a 25-year-old freelance writer and editor living in Seattle, Washington. This is how he does money.

What do you do for your main source of income, and how did you get into that line of work?

Main source for my family: my wife’s job as a speech pathologist. The main source of the money that I personally make is from freelance writing, film/video work and occasional random favors and gigs. In Los Angeles, where I lived last year, I wore a bear costume for a commercial, edited a short promotional video for a woman who called herself “The Naughty Zookeeper” and sold books (one time to Casey Affleck) at a Barnes & Noble in Pasadena. So if history is any indication, I don’t really have one main source of income.

Well, that sounds like it keeps things interesting. Would you like to be doing something else instead?

I definitely want to be writing and doing film work, just on a larger scale than I currently am. I want to find that sweet spot where I’m making a respectable amount of money, but also enjoying the work and feel that I’m making a difference. I do enjoy some of the work I’m doing right now that pays, but I enjoy working on my personal projects even more. Specifically, I’d love to write for sitcoms and/or write The Great American Novel.

About how much do you earn before taxes per year?

Thus far, I personally make <$10k as my freelance career is just starting to find its feet, and since college (2011), I’ve only really worked retail aside from the freelance gigs. As a family, we will probably make $60k to $70k for the year.

Do you feel secure with that amount?

I definitely feel secure, in the sense that I’m not afraid of going broke or wondering where my next meal will come from. I don’t want to be the kind of person who isn’t thankful for what I have, but in reality, I’d like for us to be closer to the six-figure mark, so we could put 35-50% of income straight into student loan debt.

I’m not completely sure on our combined student loan debt, but I know that my personal undergraduate loans are somewhere in the $40k range. Most of them have been deferred since graduation as I’ve never made nearly enough money to pay all of the monthly payments. The interest compiled during the last three years is starting to become noticeable, so I’m trying to find a way to proactively attack them before they get unmanageable.

Do you think incurring that debt was worth it?

In my darkest hours of self-loathing and self-pity, I start to entertain thoughts that I should have taken the educational path(s) my parents begged me to take. But I really don’t think I could trade the intellectual and creative experiences I had for a boring office job in finance or accounting. I may not be rich, but I’m happy with my life.

Do you have any savings goals?

Not so much savings, but financial organization into a way that allows us to pay off our student loans. Not sure if that will involve a direct savings plan or a more pro-active budgeting plan.

What is a question that you’ve had related to your personal finances, either in the past or recently?

How can I consolidate all of my loans into a manageable, but significant monthly payment? I don’t really have an answer yet.

This question has been addressed on NerdWallet’s Ask an Adivsor platform. You can find the answer here.

Are there any resources or tools you’ve used to learn about and manage your personal finances?

The Billfold has been really great, actually. I have written for them but I was a reader first, and I still love the personal essays and well-written advice pieces that they publish. We’ve used Mint, the finance/budget app and service, but I honestly don’t get a ton of use out of it. Google has a really neat app that helps you find the right credit card for your needs. As soon as I pay off the one I’ve had since college, I plan on using the tool to get the best bang for my buck, so to speak. Lifehacker.com has also been a big help, they have a ton of articles on personal finance and how to manage money in our wacky economy. It’s been more about saving money on things and getting the most out of gadgets and stuff, but the Wirecutter is super helpful when planning on buying something new.

How was the topic of money approached in the homes you grew up in? What factors do you think influenced that approach?

My parents divorced when I was young, so even though I never really had to think about, or deal with, money myself, I often served as messenger in money-related negotiations. I was always encouraged to save money that I got as gifts and whatnot, but the real lessons I learned were things not to do. Not to let credit card debt stack up, to start saving for A. retirement and B. college early in life, etc. Those are both goals I’d like to have, but haven’t really made it to that point yet, unfortunately. I want my children to go to college without the burden of student loans looming over them and affecting their decisions; ironically, it didn’t really affect my school decision as I went with the most expensive university on my list. My parents probably should have made me aware of what I’d be facing in the future, but I’m really glad they didn’t for a variety of reasons.

How do you think that affected your attitude money and your personal finances?

As I got older, I became less and less interested in having a lot of stuff, and I think my family’s economic situation affected that subconsciously. I was spoiled as a really young kid, but as I got older, my parents couldn’t afford a whole lot, so I became somewhat less materialistic. That said, I always like to have nice things and new things, but I’m very cautious and only buy things when I can truly afford them now. I’m writing this on the 2007 MacBook I bought before college! It’s still kicking, but I’m hoping I can get a new one soon. I wanted an iPad for so long, and every time I came close to buying one, my financial sense kicked in, and I managed to make the right decision. But earlier this year, my wife and I started getting ahold of our finances when I started making respectable freelance money, and we agreed that getting me an iPad was OK. So I think my childhood financial environment encouraged me to be cautious and realistic about finances and to only buy or do things when they were truly affordable.

Has your approach toward personal finance changed from the time you left home and how so?

The minute I left home, I had to start thinking about taking responsibility for my finances and eventually stop relying on my parents to bail me out. My wife and I have been able to take over my car payments and a portion of insurance. All that’s left is cell phone bill and the rest of the insurance, I think. There are little things here and there that my mom does for me still, but I’d like to take over that stuff soon as well. I’ve always been good about saving and being careful and thoughtful with money, but even more so since leaving home.

What is the best monetary investment you’ve made?

That’s a tough one. Probably college, since it opened my eyes to the intellectual and creative world I live in now, and without it, I wouldn’t have met my wife and have the great life we do now.

Sounds like you got a lot out of the experience! What monetary investment do you regret the most and why?

I honestly don’t think I have one. I don’t “invest” in the traditional sense, but nothing material that I’ve purchased has been a huge regret or burden.

Wow, few people can say that! What does financial stability mean to you?

The more I think about it, the more I’m unable to truly answer because there are just so many definitions of stability to me. I feel stable in that I live a comfortable life, but I wish I could save more and pay off debts and travel freely. Being able to travel to see family and for pleasure on a whim would be really freeing, I think.

What financial accomplishment are you most proud of?

I managed to give my wife an engagement ring (which she then used as part of her wedding ring) that costs around $6,000 for about $30. My grandmother who passed away when I was 18, and left my family various pieces of jewelry. My dad let me take the diamond from an old ring and have it put into a new setting. People were in awe of me, including my wife when I proposed, as it was when I was living in L.A. and had to beg for my security deposit back in order to even fly out for the holidays when I proposed. Not only was it a coup for me financially, but it meant a lot to me that I could use my grandmother’s ring in a way she would have really loved.

Really great story! Are there any questions you’ve ever wanted to ask a financial advisor?

As someone building and saving in order to start paying off student loans, are there any practical ways to invest at the same time — primarily to aid the process (i.e. a way that would accrue interest that could go toward the loan), but also for retirement, future college fund, etc. Keeping in mind that at present I don’t have a lot to invest or pay loans with, so I have to make it count.

Getting started financially is not an easy task, especially when you have student loans to pay off. Instead of making paying off the loan your priority, make getting started on a long-term investment plan your primary objective. You need to calculate how much you need at retirement to give you a guaranteed income for life starting at age 70, as an example. Once you know your number and how much you have to save, then you can start on the road to paying off your loans while meeting your long-term savings objective. It is no fun to have that loan hanging over you. But you only have so many years to compound money to retirement. If you miss them because you are focused on the wrong thing, it will have repercussions for your entire life. Determine your goal and how you are going to reach it. Then, start on that process. The loan pay down can come later.